ECO401 Assignment No 01 Fall 2019 Solution & Discussion Due Date: 21-01-2020
ECO401 Economics Assignment 1 Solution & Discussion Fall 2019
DUE DATE: JANUARY 21, 2020 MARKS: 15
Apple is an American international Tech brand that designs, manufactures, and deals in hardware devices and software. It includes number of hardware products like iPad tablet computer, smart speaker, the Apple Watch but iPhone smartphone is highly demanded product around the globe. Apple has autonomy in production and price setting of its products. Apple is famous for its scope of variety in quality products and earning high revenues. Suppose total revenue (TR) and total cost (TC) functions of Apple are following.
TR = 100Q – 1.5Q2 TC = 30 + 15Q
a. Calculate profit maximizing output level of Apple using marginal revenue (MR) and marginal cost (MC) approach.
b. Find out the amount of profit earned by Apple at profit maximizing level of output calculated in part a.
c. Find out average revenue (AR) function and slope of average revenue (AR) function.
(Marks: Part a:5, Part b: 5, Part c: 2.5+2.5)
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ECO401 Assignment No 01 Solution Fall 2019
(a) Profit maximizing out put level at MC=MR
28.34 = Q
(b) Total profit Tπ
Tπ= TR – TC
= 100Q – 1.5Q2 – (30 + 15Q )
= 100Q – 1.5Q2 – 30 – 15Q
= 85Q – 1.5Q2 – 30
By putting value of Q
= 85(28.34) – 1.5(28.34)2 – 30
= 2408.9 -1.5(803.1556) – 30
= 2408.9 – 1204.7 -30
Tπ = 1174.2
(i) Calculating average revenue (AR)
AR = TR/Q
= (100Q – 1.5Q2)/ Q
= 100 – 1.5Q
= 100 – 1.5( 28.34)
= 100 – 42.51
(ii) slope of AR function
Slope of AR = dAR/dQ
= d/dQ (100 – 1.5Q)
ECO401 Assignment no 01 Solution Fall 2019
ECO401 Assignment Solution- 1 2020 Fall & 2019 is here,
Its Prepared by Hashim Ali (Proud be a VU)
ECO401 Solution Assignment No 01 Fall 2019